Tax-Free childcare is a government scheme that can help working families pay for childcare. Tax-Free Childcare pays 20% of your childcare costs. You can claim up to £2,000 per year if your child is under 12 years old. If your child is disabled, you can claim up to £4,000 per year for a child under 17 years old.

Who is eligible for tax-free childcare?

The eligibility depends on whether you are employed, you and your partner's income, your child's age and circumstances, and your immigration status.

If you are employed, you can usually get Tax-Free Childcare help if you are at work, on sick leave or annual leave, or on shared parental, maternity, paternity or adoption leave.

If you are not working, you still might be eligible for Tax-Free Childcare if your partner is working, and you get Incapacity Benefit, Severe Disablement Allowance, Carer's Allowance or contribution-based Employment and Support Allowance.

In order to receive Tax-Free Childcare, your income over the next 3 months must be at least £1,976. If you have a partner, their income is expected to be the same. For self-employed, the income limit does not apply if they started their business less than 12 months ago.

The eligible household must have one child under 12 years old, or if the child is disabled, the age of a child is under 17. The eligibility stops on the 1^st of September after their 11^th and 16^th birthdays, respectively.

You can get Tax-Free Childcare as well as 30 hours free childcare if you're eligible for both.  However, please be aware of the following:

• Tax credits – you can't claim tax credits at the same time as Tax-Free Childcare. Your working tax credit and child tax credit will automatically stop if your Tax-Free Childcare application is successful.
• Childcare vouchers – you are required to inform your employer within 90 days of applying for Tax-Free Childcare to stop your vouchers. The same rule applies to your partner. They, too, must tell their employer to stop the voucher scheme.
• Universal credit – you should wait until you get your decision on your Tax-Free Childcare before cancelling the universal credit claim.
• Bursaries – if you or your partner receives a childcare bursary or grant, you cannot claim Tax-Free Childcare.

You can use Tax-Free Childcare to pay for approved childcare, for example, childminders, nurseries, nannies, after-school clubs or play schemes. Please be aware that the childcare provider must be signed to the scheme before paying them through Tax-Free Childcare.

How to apply?

You can apply for Tax-Free Childcare on the government website. Search for "Apply for Tax-Free Childcare". You will be instructed to create an account, where you will have to transfer the 80% of your childcare costs. The government will cover the remaining 20%. For example, if you put £80 into the account, the government will put in £20.

Once the funds are in your account and the money is shown as "cleared funds", you can pay your childcare provider. Payments should appear in your account within 24 hours.

If you would like more advice regarding the Tax-Free Childcare Scheme, please contact us at info@gkaccountingservices.com or call us on 01269 508 081, where we will be more than happy to answer any of your questions.